Labor market is gradually cooling down! The number of job vacancies in the United States decreased in February.

In February, job vacancies in the US decreased while layoffs remained low, indicating that the labor market is gradually cooling. Following the release of this data, US stocks initially fell, with the Dow Jones Industrial Average falling by 1% at one point. As of the time of writing, the three major indexes have recovered, with the Nasdaq rising by 0.5%, the S&P 500 rising by 0.17%, and the Dow rising by 0.01%. The Job Openings and Labor Turnover Survey (JOLTS) report released by the US Bureau of Labor Statistics on Tuesday showed that job vacancies in February decreased from a revised 7.76 million in January to 7.57 million, lower than economists' expectations of 7.66 million. Among them, the most significant decreases in job vacancies were in retail trade, finance, and accommodation and food services industries. Although job vacancies have been declining since their peak in 2022 and have mostly returned to pre-pandemic levels, uncertainty surrounding President Trump's policies is hindering business investment plans, which could further suppress the job market and overall economic growth. Federal Reserve Chairman Powell has described the current job market as being in a state of "low layoffs, low hiring" for several months, and the market expects the employment report to be released this Friday to show continued slowing of hiring activity, with the unemployment rate remaining at 4.1%. The JOLTS report also shows that the hiring rate in February remained at 3.4%, close to the lowest levels since the early days of the pandemic, while the layoff rate remained steady compared to before the pandemic. However, layoffs have been increasing in recent years, mainly driven by layoffs in the federal government. The increase in federal government layoffs in the February JOLTS report was the highest since 2010, and since then, the government has laid off thousands of employees. The March layoff announcements to be released on Thursday will cover data on layoffs in the private sector. In addition, consumer confidence in job prospects and financial conditions has recently declined, with companies including Walmart Inc. and American Airlines Group Inc. warning that future demand may weaken. If consumer spending significantly decreases, it could impact business hiring plans. The "quit rate," a measure of employees voluntarily leaving their jobs, remained at 2% in February, much lower than the peak of 3% in 2022. More and more workers are choosing to keep their current jobs due to pessimism about the economic outlook, and the wage increase advantage from job switching has mostly disappeared. Bloomberg economist Stuart Paul said, "The unexpected decline in job vacancies in February further strengthens our judgment that the US labor market is cooling... Revisions to the layoff rate and quit rate suggest that the labor market loosening at the beginning of this year is greater than initially estimated." The ratio of job vacancies to unemployed persons, a key indicator the Federal Reserve pays attention to, remained at 1.1, much lower than the peak of 2:1 in 2022. However, some economists have questioned the accuracy of the JOLTS data, partly due to the low response rate and significant revisions. A similar indicator provided by the job search website Indeed shows that job vacancies decreased in February and have fallen to the lowest level in four years by the end of March. Additionally, another report released on Tuesday showed that the US manufacturing sector fell into contraction for the first time in March, with prices rising significantly, indicating that the impact of rising tariffs on the economy is worsening.